Sterling Bancshares Reports 13% Growth in Operating Earnings

Apr 19, 2001, 01:00 ET from Sterling Bancshares, Inc.

    HOUSTON, April 19 /PRNewswire/ -- Sterling Bancshares, Inc. (Nasdaq: SBIB)
 today reported operating income for the first quarter of 2001 of $7.1 million
 or $.26 per diluted share, up 13% from the $.23 per diluted share earned in
 the first quarter of 2000.  Including $1.0 million in before-tax charges
 relating to the previously announced acquisition of CaminoReal Bancshares,
 reported net income for the quarter totaled $6.4 million or $.24 per diluted
 share.  For the quarter, reported return on average assets was 1.30% and
 return on average equity was 15.97%.
     "Our solid results in the first quarter reflect our continued focus on
 owner-operated businesses in the diversified and vibrant Houston economy,"
 said J. Downey Bridgwater, President. "We look forward to applying our
 successful focus and systems to the San Antonio marketplace through our
 recently completed acquisition of CaminoReal Bancshares. Our expansion into
 this new market as well as our recently established presence in the Dallas
 area, positions us to take full advantage of our state's growing economy."
     Fully taxable net interest income of $25.5 million in the quarter was up
 7.2% from the first quarter of 2000.  The net interest margin for the first
 quarter was 6.02%, up 25 basis points from the fourth quarter.  Average loans
 held for investment for the first quarter were $1.3 billion, up 11% from the
 first quarter of last year.  Excluding loans acquired in the CaminoReal
 acquisition, average loans were up 9.7% from the first quarter of 2000.
 Average deposits for the quarter were $1.6 billion, an 11.7% increase from a
 year ago.  Excluding deposits from the CaminoReal acquisition, average
 deposits increased 9.9% from the previous year's first quarter.
     Noninterest income was $12.6 million in the quarter, up 76% from the first
 quarter of last year reflecting strong growth in mortgage banking revenues.
 Noninterest income represented 33% of total revenue.  Noninterest expense,
 excluding merger-related charges, was $25.5 million for the quarter, up from
 the $20.3 million in the first quarter of 2000.  The increase in expenses is
 primarily attributable to higher volume in Sterling Capital Mortgage and
 start-up costs of the Dallas operation.
     Net charge-offs in the first quarter were $1.3 million or .38% of average
 loans, unchanged from $1.3 million or .44% of average loans in the first
 quarter of last year.  The provision for loan losses was $2.3 million for the
 quarter, up from $2.0 million a year ago.  The allowance for loan losses at
 March 31, 2001 was $18.6 million and represented 1.32% of loans held for
 investment, up from 1.23% a year ago.
     Nonperforming assets were $13.9 million at quarter-end or .86% of loans
 and foreclosed properties. Nonperforming assets at March 31, 2001 comprised
 .60% of total assets, compared to .62% at December 31, 2000 and .41% a year
 ago.
     "Our thorough credit review process, coupled with recent technological
 enhancements, has allowed us to continue to grow our loan portfolio without
 significantly increasing risk," added Bridgwater. "Our business strategy and
 disciplined lending limits minimize that risk further, as no single customer
 accounts for a large percentage of total loans. These disciplines will serve
 us well as we enter our new markets."
     At March 31, 2001, Sterling had total assets of $2.3 billion and total
 deposits of $1.9 billion.  Equity capital of $166.4 million represented 7.17%
 of total assets.  Book value per share was $6.31.
     In conjunction with the Company's first quarter earnings release, George
 Martinez, Chairman; Downey Bridgwater, President; and Eugene Putnam, Chief
 Financial Officer invite you to listen to its conference call that will be
 broadcast live over the Internet on Friday, April 20, 2001 at 10:00 AM EST.
 To participate, please visit the Company's web site at
 http://www.banksterling.com.
 
     Sterling Bancshares, Inc. is a Houston-based bank holding company that
 operates 33 community banking offices in the greater metro areas of Dallas,
 Houston, San Antonio, and South Texas.  The Company also provides
 mortgage-banking services through its 80 percent-owned subsidiary, Sterling
 Capital Mortgage Company.  Sterling's common stock is traded through the
 NASDAQ National Market System under the symbol SBIB.  For more information on
 Sterling Bancshares, please visit the Company's web site at
 http://www.banksterling.com.
 
     Except for historical information contained herein, this press release
 contains "forward-looking statements" within the meaning of the Private
 Securities Litigation Reform Act of 1995 that involve risks and uncertainties,
 including, but not limited to, the following: general business and economic
 conditions in the markets the Company serves may be less favorable than
 anticipated which could decrease the demand for loan, deposit and other
 financial services and increase loan delinquencies and defaults; changes in
 market rates and prices may adversely impact the value of securities, loans,
 deposits and other financial instruments; the Company's liquidity requirements
 could be adversely affected by changes in its assets and liabilities;
 legislative or regulatory developments including changes in laws concerning
 taxes, banking, securities, insurance and other aspects of the financial
 securities industry; competitive factors may increase, including product and
 pricing pressures among financial services organizations; and changes in
 fiscal and governmental policies of the United States federal government could
 have an adverse effect on the Company's business.  Please also read the
 additional risks and factors described from time to time in the Company's
 reports filed with the Securities and Exchange Commission, including the
 Company's Annual Report on Form 10-K for the fiscal year ended December 31,
 2000.
 
                           Sterling Bancshares, Inc.
                                   Unaudited
               (Dollars in thousands, except for per share data)
 
                                           Quarter Ended
                                              March 31,                %
     EARNINGS SUMMARY                   2001            2000        Change
     Interest income                 $37,905         $37,174         1.97%
     Interest expense                 12,419          13,397        -7.30%
     Net interest income              25,486          23,777         7.19%
     Provision for loan losses         2,300           2,024        13.64%
     Noninterest income               12,581           7,164        75.61%
     Noninterest expense              25,483          20,295        25.56%
     Conversion cost related
      to acquisition                   1,030              --           --
     Earnings before income taxes      9,254           8,622         7.33%
     Provision for income taxes        2,870           2,619         9.58%
     Net earnings                      6,384          $6,003         6.35%
     Basic earnings per share          $0.24           $0.23         5.47%
     Basic weighted average shares
      outstanding                     26,273          26,057         0.83%
     Diluted earnings per share        $0.24           $0.23         4.34%
     Diluted weighted average shares
      outstanding                     26,874          26,368         1.92%
     Cash diluted earnings per share   $0.24           $0.23         4.30%
 
 
                           Sterling Bancshares, Inc.
                                   Unaudited
               (Dollars in thousands, except for per share data)
 
                                                Average for Quarter Ended
 
                                            March 31,     Dec. 31,   Sept. 30,
     BALANCE SHEET SUMMARY                       2001         2000        2000
     Loans available for sale                $145,195     $102,708    $102,959
     Loans held for investment              1,254,449    1,194,145   1,146,869
     Total loans                            1,399,644    1,296,853   1,249,828
     Total investment securities              291,489      419,835     488,083
     Earning assets                         1,741,601    1,763,647   1,810,154
     Total assets                           1,957,326    1,953,425   2,006,825
     Noninterest bearing deposits             534,511      521,316     518,643
     Interest bearing deposits              1,069,023    1,004,721     974,808
     Total deposits                         1,603,534    1,526,037   1,493,451
     Other borrowings                         143,033      230,215     322,245
     Trust preferred securities                35,938       28,750      28,750
     Preferred equity                             484          731       1,116
     Common equity                            158,522      156,121     149,301
 
                                                   Average for Quarter Ended
                                                   June 30,         March 31,
     BALANCE SHEET SUMMARY                             2000              2000
     Loans available for sale                       $84,173           $54,186
     Loans held for investment                    1,131,135         1,129,418
     Total loans                                  1,215,308         1,183,604
     Total investment securities                    498,695           517,165
     Earning assets                               1,761,546         1,748,304
     Total assets                                 1,950,857         1,927,427
     Noninterest bearing deposits                   503,682           480,223
     Interest bearing deposits                      953,516           955,725
     Total deposits                               1,457,198         1,435,948
     Other borrowings                               311,286           310,658
     Trust preferred securities                      28,750            28,750
     Preferred equity                                   969             1,252
     Common equity                                  142,517           135,945
 
                                                       Ending Balance
 
                                           March 31,     Dec. 31,   Sept. 30,
     BALANCE SHEET SUMMARY                       2001        2000        2000
     Loans available for sale                $215,821    $139,148    $126,084
     Loans held for investment              1,403,309   1,228,981   1,173,685
     Total loans                            1,619,130   1,368,129   1,299,769
     Securities purchased with an
      agreement to resell                      48,881      37,863      33,099
     Investment securities                    363,366     291,181     473,863
     Allowance for credit losses              (18,572)    (15,693)    (14,902)
     Premises and equipment                    52,017      44,834      44,261
     Goodwill, net                             25,935       5,952       6,067
     Total assets                           2,315,874   1,925,131   2,042,122
     Noninterest bearing deposits             652,753     561,938     543,713
     Interest bearing deposits              1,262,592   1,015,797     985,780
     Total deposits                         1,915,345   1,577,735   1,529,493
     Other borrowings                         154,325     140,364     320,523
     Total liabilities                      2,089,723   1,735,195   1,859,935
     Minority interest in Sterling Capital
      Mortgage                                  2,290       2,052       1,729
     Trust preferred securities                57,500      28,750      28,750
     Preferred equity                             401         566         787
     Common equity                            165,960     158,568     150,921
 
                                                         Ending Balance
                                                   June 30,         March 31,
     BALANCE SHEET SUMMARY                             2000              2000
     Loans available for sale                      $125,802           $59,333
     Loans held for investment                    1,133,685         1,129,231
     Total loans                                  1,259,487         1,188,564
     Securities purchased with an
      agreement to resell                            57,820            42,644
     Investment securities                          496,606           507,625
     Allowance for credit losses                    (14,233)          (13,910)
     Premises and equipment                          43,591            42,777
     Goodwill, net                                    5,768             5,920
     Total assets                                 2,041,890         1,950,990
     Noninterest bearing deposits                   551,331           501,045
     Interest bearing deposits                      954,931           991,627
     Total deposits                               1,506,262         1,492,672
     Other borrowings                               352,373           289,761
     Total liabilities                            1,866,964         1,782,433
     Minority interest in Sterling Capital
      Mortgage                                        1,520             1,325
     Trust preferred securities                      28,750            28,750
     Preferred equity                                   969               969
     Common equity                                  143,687           137,513
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                             (Dollars in thousands)
 
                                        March    Dec.   Sept.    June   March
                                           31,    31,     30,      30,     31,
     NONPERFORMING ASSETS                2001    2000    2000    2000    2000
 
     Nonaccrual loans                 $10,226  $8,081  $7,201  $7,312  $6,188
     Restructured loans                 1,356   1,298      --      --      --
     Other real estate                  1,895   1,702   1,445   1,005   1,355
     Other repossessed assets             153     192     107     212     268
     Accruing loans past
       due 90 days or more                296     604     106     218     269
     Total nonperforming
       assets                         $13,926 $11,877  $8,859  $8,747  $8,080
     Total nonperforming assets
       as a percentage of loans,
       ORE and ORA                       0.86%   0.87%   0.68%   0.69%   0.68%
 
                                                    Quarter Ended
                                     March      Dec.    Sept.    June    March
                                        31,      31,      30,      30,      31,
     ALLOWANCE FOR LOAN LOSSES        2001     2000     2000     2000     2000
 
     Balance at beginning of
      period                       $15,693  $14,902  $14,233  $13,910  $13,187
     Loans charged off              (1,790)  (2,179)  (1,685)  (2,080)  (1,509)
     Loan recoveries                   474      249      148      254      208
       Net charge-offs              (1,316)  (1,930)  (1,537)  (1,826)  (1,301)
     Provision for loan losses       2,300    2,721    2,206    2,149    2,024
     Acquisition of CaminoReal
      Bank                           1,895       --       --       --       --
     Balance at end of period      $18,572  $15,693  $14,902  $14,233  $13,910
 
     Allowance for loan losses as
      a percentage of total loans     1.15%    1.15%    1.15%    1.13%    1.17%
 
     Allowance for loan losses as
      a percentage of total loans
        held for investment           1.32%    1.28%    1.27%    1.26%    1.23%
 
     Allowance for loan losses as
      a percentage of
       nonperforming assets         133.36%  132.13%  168.21%  162.72%  172.15%
 
     Net charge-offs as a
      percentage of
       average loans (annualized)    0.38%    0.59%    0.49%    0.60%    0.44%
 
     Provision for loan losses as
      a percentage of
       average loans (annualized)    0.67%    0.83%    0.70%    0.71%    0.69%
 
                                                   Quarter Ended
                                       March     Dec.   Sept.   June   March
                                          31,     31,     30,     30,     31,
                                        2001    2000    2000    2000    2000
     SELECTED RATIOS
     Annualized return on
      average assets                    1.30%   1.42%   1.37%   1.38%   1.25%
 
     Annualized return on average
       shareholders' equity            15.97%  17.68%  18.29%  18.76%  17.60%
 
     Net interest margin (tax
      equivalent)                       6.02%   5.77%   5.52%   5.70%   5.55%
 
     End of period book value per
      common share                      $6.31   $6.05   $5.76   $5.49   $5.27
 
     End of period common shares
      outstanding                      26,296  26,231  26,199  26,162  26,085
 
     Tangible book value
      per common share                  $5.32   $5.82   $5.53   $5.27   $5.04
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                             (Dollars in thousands)
 
                                            Quarter Ended March 31,
                                            (Dollars in thousands)
 
                                                      2001
                                      Average
                                      Balance         Interest        Yield
 
     Interest Earning Assets:
     Interest bearing
      deposits in financial
      institutions                      $468              $7         6.07%
     Federal funds sold               13,379             196         5.94%
     Securities purchased under
      agreements to resell            36,621             649         7.19%
     Securities (taxable)            218,465           3,595         6.67%
     Securities (tax-exempt)          73,024             795         4.42%
     Loans (taxable)               1,396,121          32,603         9.47%
     Loans (tax-exempt)                3,523              60         6.91%
     Total Interest
      Earning Assets               1,741,601          37,905         8.83%
 
     Noninterest Earning Assets:
     Cash and due from banks          73,094
     Premises and equipment, net      46,453
     Other assets                    112,413
     Allowance for credit losses     (16,235)
     Total Noninterest
      Earning Assets                 215,725
 
     Total Assets                 $1,957,326
 
     Interest Bearing Liabilities:
     Demand and savings deposits    $644,363          $4,502         2.83%
     Certificates and other
      time deposits                  424,660           5,928         5.66%
     Other borrowings                143,033           1,989         5.64%
     Total Interest
      Bearing Liabilities          1,212,056          12,419         4.16%
 
     Noninterest Bearing Liabilities:
     Demand deposits                 534,511
     Other liabilities                15,816
     Trust preferred securities       35,938
     Shareholders' equity            159,006
                                     745,270
 
     Total Liabilities and
      Shareholders' Equity       $ 1,957,326
 
     Net Interest Income & Margin                    $25,486         5.93%
 
     Net Interest Income &
      Margin (tax equivalent)                        $25,854         6.02%
 
 
                                                       2000
                                      Average
                                      Balance        Interest       Yield
     Interest Earning Assets:
     Interest bearing
      deposits in financial
      institutions                      $463              $7         6.08%
     Federal funds sold               10,401             148         5.72%
     Securities purchased under
      agreements to resell            36,671             665         7.29%
     Securities (taxable)            441,130           7,343         6.69%
     Securities (tax-exempt)          76,035             829         4.39%
     Loans (taxable)               1,183,106          28,172         9.58%
     Loans (tax-exempt)                  498              10         8.08%
     Total Interest
      Earning Assets               1,748,304          37,174         8.55%
 
     Noninterest Earning Assets:
     Cash and due from banks          66,776
     Premises and equipment, net      41,942
     Other assets                     84,148
     Allowance for credit losses     (13,743)
     Total Noninterest
      Earning Assets                 179,123
 
     Total Assets                $ 1,927,427
 
     Interest Bearing Liabilities:
     Demand and savings deposits    $591,762          $4,293         2.92%
     Certificates and other
      time deposits                  363,963           4,568         5.05%
     Other borrowings                310,658           4,536         5.87%
     Total Interest
      Bearing Liabilities          1,266,383          13,397         4.25%
 
     Noninterest Bearing Liabilities:
     Demand deposits                 480,223
     Other liabilities                14,874
     Trust preferred securities       28,750
     Shareholders' equity            137,197
                                     661,044
 
     Total Liabilities and
      Shareholders' Equity       $ 1,927,427
 
     Net Interest Income & Margin                    $23,777         5.47%
 
     Net Interest Income &
      Margin (tax equivalent)                        $24,123         5.55%
 
 
                           Sterling Bancshares, Inc.
                                   Unaudited
                 (Dollars in thousands, except for per share data)
 
                                              Quarter Ended March 31, 2001
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     EARNINGS SUMMARY
     Interest income                          $37,905       $ --     $37,905
     Interest expense                          12,419         --      12,419
     Net interest income                       25,486         --      25,486
     Provision for loan losses                  2,300         --       2,300
     Noninterest income                         4,700      7,881      12,581
     Noninterest expense                       19,697      5,786      25,483
     Conversion cost related to
      acquisition                               1,030         --       1,030
     Earnings before income taxes               7,159      2,095       9,254
     Provision for income taxes                 2,100        770       2,870
     Net earnings                              $5,059     $1,325      $6,384
 
     EFFICIENCY RATIO                          63.91%     73.42%      65.85%
 
                                             Quarter Ended March 31, 2000
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     EARNINGS SUMMARY
     Interest income                          $37,174       $ --     $37,174
     Interest expense                          13,397         --      13,397
     Net interest income                       23,777         --      23,777
     Provision for loan losses                  2,024         --       2,024
     Noninterest income                         4,429      2,735       7,164
     Noninterest expense                       17,723      2,572      20,295
     Conversion cost related to
      acquisition                                  --         --          --
     Earnings before income taxes               8,459        163       8,622
     Provision for income taxes                 2,552         67       2,619
     Net earnings                              $5,907        $96      $6,003
 
     EFFICIENCY RATIO                          61.59%     94.04%      64.40%
 
                                             Quarter Ended March 31, 2001
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     NONINTEREST INCOME
     Customer service fees                     $2,651       $ --      $2,651
     Bank-owned life insurance income             494         --         494
     Gain on sale of mortgage loans                --      4,284       4,284
     Gain on the sale of
          credit card loan portfolio               --         --          --
     Debit card fees                              157         --         157
     Other                                      1,398      3,597       4,995
          Total                                $4,700     $7,881     $12,581
 
     NONINTEREST EXPENSE
     Salaries and employee benefits           $11,378     $3,488     $14,866
     Occupancy expense                          2,681        876       3,557
     Technology                                 1,022        111       1,133
     Supplies                                     287        103         390
     Goodwill amortization                         46         68         114
     Professional fees                            490         44         534
     Minority interest expense                    748        331       1,079
     Other                                      3,045        765       3,810
          Total                               $19,697     $5,786     $25,483
 
                                             Quarter Ended March 31, 2000
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     NONINTEREST INCOME
     Customer service fees                     $2,533       $ --      $2,533
     Bank-owned life insurance income             417         --         417
     Gain on sale of mortgage loans                --      1,789       1,789
     Gain on the sale of
          credit card loan portfolio              237         --         237
     Debit card fees                               --         --          --
     Other                                      1,242        946       2,188
          Total                                $4,429     $2,735      $7,164
 
     NONINTEREST EXPENSE
     Salaries and employee benefits           $10,367     $1,229     $11,596
     Occupancy expense                          2,283        657       2,940
     Technology                                   857         31         888
     Supplies                                     272         91         363
     Goodwill amortization                         47         64         111
     Professional fees                            359         36         395
     Minority interest expense                    667         24         691
     Other                                      2,871        440       3,311
          Total                               $17,723     $2,572     $20,295
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                  (Dollars in thousands except per share data)
 
                           March 31,               December 31,
                               2001            %          2000            %
     LOAN PORTFOLIO
     Commercial and
      industrial           $469,425        28.99%    $ 440,483        32.20%
     Real estate:
      Commercial            422,508        26.10%      402,765        29.43%
      One-to-four family
       available for sale   215,821        13.33%      139,148        10.17%
      One-to-four family    128,012         7.91%      115,069         8.41%
      Multi-family           37,207         2.30%       30,715         2.25%
      Construction &
       development          213,444        13.18%      122,800         8.98%
     Consumer               123,558         7.63%      114,908         8.40%
     Other                    9,272         0.57%        1,920         0.14%
     Total loans (gross)  1,619,247       100.01%    1,367,808        99.98%
     Unearned premium
      (discounts)              (117)       -0.01%          321         0.02%
     Total loans (net)  $ 1,619,130       100.00%   $1,368,129       100.00%
 
                                                    March 31,      December 31,
                                                        2001              2000
     INTANGIBLES
     Goodwill                                        $25,935            $5,952
     Mortgage service intangibles                      2,123               907
                                                     $28,058            $6,859
 
                                                   March 31,      December 31,
     REGULATORY CAPITAL DATA                           2001              2000
     Tier  1 Capital                               $196,289          $182,842
     Tier  1 Ratio                                    10.02%            10.78%
     Total Capital (Tier 1 + Tier 2)               $209,879          $195,326
     Total Capital Ratio                              10.71%            11.51%
     Total Risk -Adjusted Assets                 $1,959,788        $1,696,386
     Tier 1 Leverage Ratio                             8.60%             9.39%
 
     FUNDINGS AT MORTGAGE COMPANY
                                            Original
                                           Production   Refinanced    Total
     Quarter ended 3/31/00                   $242,001     $13,466    $255,467
     Quarter ended 6/30/00                   $335,992     $26,094    $362,086
     Quarter ended 9/30/00                   $346,075     $24,794    $370,869
     Quarter ended 12/31/00                  $339,534     $41,802    $381,336
     Quarter ended 3/31/01                   $369,974    $125,188    $495,162
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                  (Dollars in thousands except per share data)
 
                                              March 31,        December 31,
                                                 2001              2000
     SUPPLEMENTAL DATA
     Held to maturity
      securities - fair value                  $87,245           $91,061
     Held to maturity
      securities - book value                  $85,805           $90,927
     Available for sale
      securities - fair value                 $277,561          $200,254
     Available for sale
      securities - amortized cost             $273,388          $198,637
     Pledged securities - book value          $241,478          $235,651
     Common dividends per share                 $0.055            $0.050
     EOP employees - Sterling Bank (FTEs)          759               743
     EOP employees - CaminoReal Bank (FTEs)        122                 -
     EOP employees - mortgage company (FTEs)       416               351
     Total number of banking offices                33                24
 
                                             52 Week High      52 Week Low
     Stock price (close)                        $20.13             $9.50
 
 

SOURCE Sterling Bancshares, Inc.
    HOUSTON, April 19 /PRNewswire/ -- Sterling Bancshares, Inc. (Nasdaq: SBIB)
 today reported operating income for the first quarter of 2001 of $7.1 million
 or $.26 per diluted share, up 13% from the $.23 per diluted share earned in
 the first quarter of 2000.  Including $1.0 million in before-tax charges
 relating to the previously announced acquisition of CaminoReal Bancshares,
 reported net income for the quarter totaled $6.4 million or $.24 per diluted
 share.  For the quarter, reported return on average assets was 1.30% and
 return on average equity was 15.97%.
     "Our solid results in the first quarter reflect our continued focus on
 owner-operated businesses in the diversified and vibrant Houston economy,"
 said J. Downey Bridgwater, President. "We look forward to applying our
 successful focus and systems to the San Antonio marketplace through our
 recently completed acquisition of CaminoReal Bancshares. Our expansion into
 this new market as well as our recently established presence in the Dallas
 area, positions us to take full advantage of our state's growing economy."
     Fully taxable net interest income of $25.5 million in the quarter was up
 7.2% from the first quarter of 2000.  The net interest margin for the first
 quarter was 6.02%, up 25 basis points from the fourth quarter.  Average loans
 held for investment for the first quarter were $1.3 billion, up 11% from the
 first quarter of last year.  Excluding loans acquired in the CaminoReal
 acquisition, average loans were up 9.7% from the first quarter of 2000.
 Average deposits for the quarter were $1.6 billion, an 11.7% increase from a
 year ago.  Excluding deposits from the CaminoReal acquisition, average
 deposits increased 9.9% from the previous year's first quarter.
     Noninterest income was $12.6 million in the quarter, up 76% from the first
 quarter of last year reflecting strong growth in mortgage banking revenues.
 Noninterest income represented 33% of total revenue.  Noninterest expense,
 excluding merger-related charges, was $25.5 million for the quarter, up from
 the $20.3 million in the first quarter of 2000.  The increase in expenses is
 primarily attributable to higher volume in Sterling Capital Mortgage and
 start-up costs of the Dallas operation.
     Net charge-offs in the first quarter were $1.3 million or .38% of average
 loans, unchanged from $1.3 million or .44% of average loans in the first
 quarter of last year.  The provision for loan losses was $2.3 million for the
 quarter, up from $2.0 million a year ago.  The allowance for loan losses at
 March 31, 2001 was $18.6 million and represented 1.32% of loans held for
 investment, up from 1.23% a year ago.
     Nonperforming assets were $13.9 million at quarter-end or .86% of loans
 and foreclosed properties. Nonperforming assets at March 31, 2001 comprised
 .60% of total assets, compared to .62% at December 31, 2000 and .41% a year
 ago.
     "Our thorough credit review process, coupled with recent technological
 enhancements, has allowed us to continue to grow our loan portfolio without
 significantly increasing risk," added Bridgwater. "Our business strategy and
 disciplined lending limits minimize that risk further, as no single customer
 accounts for a large percentage of total loans. These disciplines will serve
 us well as we enter our new markets."
     At March 31, 2001, Sterling had total assets of $2.3 billion and total
 deposits of $1.9 billion.  Equity capital of $166.4 million represented 7.17%
 of total assets.  Book value per share was $6.31.
     In conjunction with the Company's first quarter earnings release, George
 Martinez, Chairman; Downey Bridgwater, President; and Eugene Putnam, Chief
 Financial Officer invite you to listen to its conference call that will be
 broadcast live over the Internet on Friday, April 20, 2001 at 10:00 AM EST.
 To participate, please visit the Company's web site at
 http://www.banksterling.com.
 
     Sterling Bancshares, Inc. is a Houston-based bank holding company that
 operates 33 community banking offices in the greater metro areas of Dallas,
 Houston, San Antonio, and South Texas.  The Company also provides
 mortgage-banking services through its 80 percent-owned subsidiary, Sterling
 Capital Mortgage Company.  Sterling's common stock is traded through the
 NASDAQ National Market System under the symbol SBIB.  For more information on
 Sterling Bancshares, please visit the Company's web site at
 http://www.banksterling.com.
 
     Except for historical information contained herein, this press release
 contains "forward-looking statements" within the meaning of the Private
 Securities Litigation Reform Act of 1995 that involve risks and uncertainties,
 including, but not limited to, the following: general business and economic
 conditions in the markets the Company serves may be less favorable than
 anticipated which could decrease the demand for loan, deposit and other
 financial services and increase loan delinquencies and defaults; changes in
 market rates and prices may adversely impact the value of securities, loans,
 deposits and other financial instruments; the Company's liquidity requirements
 could be adversely affected by changes in its assets and liabilities;
 legislative or regulatory developments including changes in laws concerning
 taxes, banking, securities, insurance and other aspects of the financial
 securities industry; competitive factors may increase, including product and
 pricing pressures among financial services organizations; and changes in
 fiscal and governmental policies of the United States federal government could
 have an adverse effect on the Company's business.  Please also read the
 additional risks and factors described from time to time in the Company's
 reports filed with the Securities and Exchange Commission, including the
 Company's Annual Report on Form 10-K for the fiscal year ended December 31,
 2000.
 
                           Sterling Bancshares, Inc.
                                   Unaudited
               (Dollars in thousands, except for per share data)
 
                                           Quarter Ended
                                              March 31,                %
     EARNINGS SUMMARY                   2001            2000        Change
     Interest income                 $37,905         $37,174         1.97%
     Interest expense                 12,419          13,397        -7.30%
     Net interest income              25,486          23,777         7.19%
     Provision for loan losses         2,300           2,024        13.64%
     Noninterest income               12,581           7,164        75.61%
     Noninterest expense              25,483          20,295        25.56%
     Conversion cost related
      to acquisition                   1,030              --           --
     Earnings before income taxes      9,254           8,622         7.33%
     Provision for income taxes        2,870           2,619         9.58%
     Net earnings                      6,384          $6,003         6.35%
     Basic earnings per share          $0.24           $0.23         5.47%
     Basic weighted average shares
      outstanding                     26,273          26,057         0.83%
     Diluted earnings per share        $0.24           $0.23         4.34%
     Diluted weighted average shares
      outstanding                     26,874          26,368         1.92%
     Cash diluted earnings per share   $0.24           $0.23         4.30%
 
 
                           Sterling Bancshares, Inc.
                                   Unaudited
               (Dollars in thousands, except for per share data)
 
                                                Average for Quarter Ended
 
                                            March 31,     Dec. 31,   Sept. 30,
     BALANCE SHEET SUMMARY                       2001         2000        2000
     Loans available for sale                $145,195     $102,708    $102,959
     Loans held for investment              1,254,449    1,194,145   1,146,869
     Total loans                            1,399,644    1,296,853   1,249,828
     Total investment securities              291,489      419,835     488,083
     Earning assets                         1,741,601    1,763,647   1,810,154
     Total assets                           1,957,326    1,953,425   2,006,825
     Noninterest bearing deposits             534,511      521,316     518,643
     Interest bearing deposits              1,069,023    1,004,721     974,808
     Total deposits                         1,603,534    1,526,037   1,493,451
     Other borrowings                         143,033      230,215     322,245
     Trust preferred securities                35,938       28,750      28,750
     Preferred equity                             484          731       1,116
     Common equity                            158,522      156,121     149,301
 
                                                   Average for Quarter Ended
                                                   June 30,         March 31,
     BALANCE SHEET SUMMARY                             2000              2000
     Loans available for sale                       $84,173           $54,186
     Loans held for investment                    1,131,135         1,129,418
     Total loans                                  1,215,308         1,183,604
     Total investment securities                    498,695           517,165
     Earning assets                               1,761,546         1,748,304
     Total assets                                 1,950,857         1,927,427
     Noninterest bearing deposits                   503,682           480,223
     Interest bearing deposits                      953,516           955,725
     Total deposits                               1,457,198         1,435,948
     Other borrowings                               311,286           310,658
     Trust preferred securities                      28,750            28,750
     Preferred equity                                   969             1,252
     Common equity                                  142,517           135,945
 
                                                       Ending Balance
 
                                           March 31,     Dec. 31,   Sept. 30,
     BALANCE SHEET SUMMARY                       2001        2000        2000
     Loans available for sale                $215,821    $139,148    $126,084
     Loans held for investment              1,403,309   1,228,981   1,173,685
     Total loans                            1,619,130   1,368,129   1,299,769
     Securities purchased with an
      agreement to resell                      48,881      37,863      33,099
     Investment securities                    363,366     291,181     473,863
     Allowance for credit losses              (18,572)    (15,693)    (14,902)
     Premises and equipment                    52,017      44,834      44,261
     Goodwill, net                             25,935       5,952       6,067
     Total assets                           2,315,874   1,925,131   2,042,122
     Noninterest bearing deposits             652,753     561,938     543,713
     Interest bearing deposits              1,262,592   1,015,797     985,780
     Total deposits                         1,915,345   1,577,735   1,529,493
     Other borrowings                         154,325     140,364     320,523
     Total liabilities                      2,089,723   1,735,195   1,859,935
     Minority interest in Sterling Capital
      Mortgage                                  2,290       2,052       1,729
     Trust preferred securities                57,500      28,750      28,750
     Preferred equity                             401         566         787
     Common equity                            165,960     158,568     150,921
 
                                                         Ending Balance
                                                   June 30,         March 31,
     BALANCE SHEET SUMMARY                             2000              2000
     Loans available for sale                      $125,802           $59,333
     Loans held for investment                    1,133,685         1,129,231
     Total loans                                  1,259,487         1,188,564
     Securities purchased with an
      agreement to resell                            57,820            42,644
     Investment securities                          496,606           507,625
     Allowance for credit losses                    (14,233)          (13,910)
     Premises and equipment                          43,591            42,777
     Goodwill, net                                    5,768             5,920
     Total assets                                 2,041,890         1,950,990
     Noninterest bearing deposits                   551,331           501,045
     Interest bearing deposits                      954,931           991,627
     Total deposits                               1,506,262         1,492,672
     Other borrowings                               352,373           289,761
     Total liabilities                            1,866,964         1,782,433
     Minority interest in Sterling Capital
      Mortgage                                        1,520             1,325
     Trust preferred securities                      28,750            28,750
     Preferred equity                                   969               969
     Common equity                                  143,687           137,513
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                             (Dollars in thousands)
 
                                        March    Dec.   Sept.    June   March
                                           31,    31,     30,      30,     31,
     NONPERFORMING ASSETS                2001    2000    2000    2000    2000
 
     Nonaccrual loans                 $10,226  $8,081  $7,201  $7,312  $6,188
     Restructured loans                 1,356   1,298      --      --      --
     Other real estate                  1,895   1,702   1,445   1,005   1,355
     Other repossessed assets             153     192     107     212     268
     Accruing loans past
       due 90 days or more                296     604     106     218     269
     Total nonperforming
       assets                         $13,926 $11,877  $8,859  $8,747  $8,080
     Total nonperforming assets
       as a percentage of loans,
       ORE and ORA                       0.86%   0.87%   0.68%   0.69%   0.68%
 
                                                    Quarter Ended
                                     March      Dec.    Sept.    June    March
                                        31,      31,      30,      30,      31,
     ALLOWANCE FOR LOAN LOSSES        2001     2000     2000     2000     2000
 
     Balance at beginning of
      period                       $15,693  $14,902  $14,233  $13,910  $13,187
     Loans charged off              (1,790)  (2,179)  (1,685)  (2,080)  (1,509)
     Loan recoveries                   474      249      148      254      208
       Net charge-offs              (1,316)  (1,930)  (1,537)  (1,826)  (1,301)
     Provision for loan losses       2,300    2,721    2,206    2,149    2,024
     Acquisition of CaminoReal
      Bank                           1,895       --       --       --       --
     Balance at end of period      $18,572  $15,693  $14,902  $14,233  $13,910
 
     Allowance for loan losses as
      a percentage of total loans     1.15%    1.15%    1.15%    1.13%    1.17%
 
     Allowance for loan losses as
      a percentage of total loans
        held for investment           1.32%    1.28%    1.27%    1.26%    1.23%
 
     Allowance for loan losses as
      a percentage of
       nonperforming assets         133.36%  132.13%  168.21%  162.72%  172.15%
 
     Net charge-offs as a
      percentage of
       average loans (annualized)    0.38%    0.59%    0.49%    0.60%    0.44%
 
     Provision for loan losses as
      a percentage of
       average loans (annualized)    0.67%    0.83%    0.70%    0.71%    0.69%
 
                                                   Quarter Ended
                                       March     Dec.   Sept.   June   March
                                          31,     31,     30,     30,     31,
                                        2001    2000    2000    2000    2000
     SELECTED RATIOS
     Annualized return on
      average assets                    1.30%   1.42%   1.37%   1.38%   1.25%
 
     Annualized return on average
       shareholders' equity            15.97%  17.68%  18.29%  18.76%  17.60%
 
     Net interest margin (tax
      equivalent)                       6.02%   5.77%   5.52%   5.70%   5.55%
 
     End of period book value per
      common share                      $6.31   $6.05   $5.76   $5.49   $5.27
 
     End of period common shares
      outstanding                      26,296  26,231  26,199  26,162  26,085
 
     Tangible book value
      per common share                  $5.32   $5.82   $5.53   $5.27   $5.04
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                             (Dollars in thousands)
 
                                            Quarter Ended March 31,
                                            (Dollars in thousands)
 
                                                      2001
                                      Average
                                      Balance         Interest        Yield
 
     Interest Earning Assets:
     Interest bearing
      deposits in financial
      institutions                      $468              $7         6.07%
     Federal funds sold               13,379             196         5.94%
     Securities purchased under
      agreements to resell            36,621             649         7.19%
     Securities (taxable)            218,465           3,595         6.67%
     Securities (tax-exempt)          73,024             795         4.42%
     Loans (taxable)               1,396,121          32,603         9.47%
     Loans (tax-exempt)                3,523              60         6.91%
     Total Interest
      Earning Assets               1,741,601          37,905         8.83%
 
     Noninterest Earning Assets:
     Cash and due from banks          73,094
     Premises and equipment, net      46,453
     Other assets                    112,413
     Allowance for credit losses     (16,235)
     Total Noninterest
      Earning Assets                 215,725
 
     Total Assets                 $1,957,326
 
     Interest Bearing Liabilities:
     Demand and savings deposits    $644,363          $4,502         2.83%
     Certificates and other
      time deposits                  424,660           5,928         5.66%
     Other borrowings                143,033           1,989         5.64%
     Total Interest
      Bearing Liabilities          1,212,056          12,419         4.16%
 
     Noninterest Bearing Liabilities:
     Demand deposits                 534,511
     Other liabilities                15,816
     Trust preferred securities       35,938
     Shareholders' equity            159,006
                                     745,270
 
     Total Liabilities and
      Shareholders' Equity       $ 1,957,326
 
     Net Interest Income & Margin                    $25,486         5.93%
 
     Net Interest Income &
      Margin (tax equivalent)                        $25,854         6.02%
 
 
                                                       2000
                                      Average
                                      Balance        Interest       Yield
     Interest Earning Assets:
     Interest bearing
      deposits in financial
      institutions                      $463              $7         6.08%
     Federal funds sold               10,401             148         5.72%
     Securities purchased under
      agreements to resell            36,671             665         7.29%
     Securities (taxable)            441,130           7,343         6.69%
     Securities (tax-exempt)          76,035             829         4.39%
     Loans (taxable)               1,183,106          28,172         9.58%
     Loans (tax-exempt)                  498              10         8.08%
     Total Interest
      Earning Assets               1,748,304          37,174         8.55%
 
     Noninterest Earning Assets:
     Cash and due from banks          66,776
     Premises and equipment, net      41,942
     Other assets                     84,148
     Allowance for credit losses     (13,743)
     Total Noninterest
      Earning Assets                 179,123
 
     Total Assets                $ 1,927,427
 
     Interest Bearing Liabilities:
     Demand and savings deposits    $591,762          $4,293         2.92%
     Certificates and other
      time deposits                  363,963           4,568         5.05%
     Other borrowings                310,658           4,536         5.87%
     Total Interest
      Bearing Liabilities          1,266,383          13,397         4.25%
 
     Noninterest Bearing Liabilities:
     Demand deposits                 480,223
     Other liabilities                14,874
     Trust preferred securities       28,750
     Shareholders' equity            137,197
                                     661,044
 
     Total Liabilities and
      Shareholders' Equity       $ 1,927,427
 
     Net Interest Income & Margin                    $23,777         5.47%
 
     Net Interest Income &
      Margin (tax equivalent)                        $24,123         5.55%
 
 
                           Sterling Bancshares, Inc.
                                   Unaudited
                 (Dollars in thousands, except for per share data)
 
                                              Quarter Ended March 31, 2001
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     EARNINGS SUMMARY
     Interest income                          $37,905       $ --     $37,905
     Interest expense                          12,419         --      12,419
     Net interest income                       25,486         --      25,486
     Provision for loan losses                  2,300         --       2,300
     Noninterest income                         4,700      7,881      12,581
     Noninterest expense                       19,697      5,786      25,483
     Conversion cost related to
      acquisition                               1,030         --       1,030
     Earnings before income taxes               7,159      2,095       9,254
     Provision for income taxes                 2,100        770       2,870
     Net earnings                              $5,059     $1,325      $6,384
 
     EFFICIENCY RATIO                          63.91%     73.42%      65.85%
 
                                             Quarter Ended March 31, 2000
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     EARNINGS SUMMARY
     Interest income                          $37,174       $ --     $37,174
     Interest expense                          13,397         --      13,397
     Net interest income                       23,777         --      23,777
     Provision for loan losses                  2,024         --       2,024
     Noninterest income                         4,429      2,735       7,164
     Noninterest expense                       17,723      2,572      20,295
     Conversion cost related to
      acquisition                                  --         --          --
     Earnings before income taxes               8,459        163       8,622
     Provision for income taxes                 2,552         67       2,619
     Net earnings                              $5,907        $96      $6,003
 
     EFFICIENCY RATIO                          61.59%     94.04%      64.40%
 
                                             Quarter Ended March 31, 2001
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     NONINTEREST INCOME
     Customer service fees                     $2,651       $ --      $2,651
     Bank-owned life insurance income             494         --         494
     Gain on sale of mortgage loans                --      4,284       4,284
     Gain on the sale of
          credit card loan portfolio               --         --          --
     Debit card fees                              157         --         157
     Other                                      1,398      3,597       4,995
          Total                                $4,700     $7,881     $12,581
 
     NONINTEREST EXPENSE
     Salaries and employee benefits           $11,378     $3,488     $14,866
     Occupancy expense                          2,681        876       3,557
     Technology                                 1,022        111       1,133
     Supplies                                     287        103         390
     Goodwill amortization                         46         68         114
     Professional fees                            490         44         534
     Minority interest expense                    748        331       1,079
     Other                                      3,045        765       3,810
          Total                               $19,697     $5,786     $25,483
 
                                             Quarter Ended March 31, 2000
                                           Commercial   Mortgage
                                              Banking    Banking    Combined
     NONINTEREST INCOME
     Customer service fees                     $2,533       $ --      $2,533
     Bank-owned life insurance income             417         --         417
     Gain on sale of mortgage loans                --      1,789       1,789
     Gain on the sale of
          credit card loan portfolio              237         --         237
     Debit card fees                               --         --          --
     Other                                      1,242        946       2,188
          Total                                $4,429     $2,735      $7,164
 
     NONINTEREST EXPENSE
     Salaries and employee benefits           $10,367     $1,229     $11,596
     Occupancy expense                          2,283        657       2,940
     Technology                                   857         31         888
     Supplies                                     272         91         363
     Goodwill amortization                         47         64         111
     Professional fees                            359         36         395
     Minority interest expense                    667         24         691
     Other                                      2,871        440       3,311
          Total                               $17,723     $2,572     $20,295
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                  (Dollars in thousands except per share data)
 
                           March 31,               December 31,
                               2001            %          2000            %
     LOAN PORTFOLIO
     Commercial and
      industrial           $469,425        28.99%    $ 440,483        32.20%
     Real estate:
      Commercial            422,508        26.10%      402,765        29.43%
      One-to-four family
       available for sale   215,821        13.33%      139,148        10.17%
      One-to-four family    128,012         7.91%      115,069         8.41%
      Multi-family           37,207         2.30%       30,715         2.25%
      Construction &
       development          213,444        13.18%      122,800         8.98%
     Consumer               123,558         7.63%      114,908         8.40%
     Other                    9,272         0.57%        1,920         0.14%
     Total loans (gross)  1,619,247       100.01%    1,367,808        99.98%
     Unearned premium
      (discounts)              (117)       -0.01%          321         0.02%
     Total loans (net)  $ 1,619,130       100.00%   $1,368,129       100.00%
 
                                                    March 31,      December 31,
                                                        2001              2000
     INTANGIBLES
     Goodwill                                        $25,935            $5,952
     Mortgage service intangibles                      2,123               907
                                                     $28,058            $6,859
 
                                                   March 31,      December 31,
     REGULATORY CAPITAL DATA                           2001              2000
     Tier  1 Capital                               $196,289          $182,842
     Tier  1 Ratio                                    10.02%            10.78%
     Total Capital (Tier 1 + Tier 2)               $209,879          $195,326
     Total Capital Ratio                              10.71%            11.51%
     Total Risk -Adjusted Assets                 $1,959,788        $1,696,386
     Tier 1 Leverage Ratio                             8.60%             9.39%
 
     FUNDINGS AT MORTGAGE COMPANY
                                            Original
                                           Production   Refinanced    Total
     Quarter ended 3/31/00                   $242,001     $13,466    $255,467
     Quarter ended 6/30/00                   $335,992     $26,094    $362,086
     Quarter ended 9/30/00                   $346,075     $24,794    $370,869
     Quarter ended 12/31/00                  $339,534     $41,802    $381,336
     Quarter ended 3/31/01                   $369,974    $125,188    $495,162
 
 
                           Sterling Bancshares, Inc.
                                  (Unaudited)
                  (Dollars in thousands except per share data)
 
                                              March 31,        December 31,
                                                 2001              2000
     SUPPLEMENTAL DATA
     Held to maturity
      securities - fair value                  $87,245           $91,061
     Held to maturity
      securities - book value                  $85,805           $90,927
     Available for sale
      securities - fair value                 $277,561          $200,254
     Available for sale
      securities - amortized cost             $273,388          $198,637
     Pledged securities - book value          $241,478          $235,651
     Common dividends per share                 $0.055            $0.050
     EOP employees - Sterling Bank (FTEs)          759               743
     EOP employees - CaminoReal Bank (FTEs)        122                 -
     EOP employees - mortgage company (FTEs)       416               351
     Total number of banking offices                33                24
 
                                             52 Week High      52 Week Low
     Stock price (close)                        $20.13             $9.50
 
 SOURCE  Sterling Bancshares, Inc.